Mining Profits...Investing In Industrial Metals

Copper edged up as the market recovered after falling some 2 pct yesterday amid yet another gain in LME inventories and concerns over global growth, but analysts warned the market looks weak as it heads into the year end.

At 12.33 pm, LME copper for three-month delivery was up at 6,795.00 usd a tonne from 6,715.00 usd at the close yesterday.

'Prices are likely to drift lower with only scaled-down buyers ... attracted to the weaker price levels while other consumer/merchants are in no hurry to buy,' said UBS Investment Bank analyst Robin Bhar.

Copper prices fell yesterday after LME stocks rose by 4,600 tonnes and after the World Bank said a slowdown in global economic growth is underway, led by the US.

The bank added that a cooling US housing market could intensify the downturn.

The LME said in its daily report today that copper stocks in its warehouses have risen by another 1,675 tonnes. Stockpiles are now more than 40 pct above levels seen in mid-October.

'With the relentless stock falls now no longer evident, it looks as though the dynamics of the market have changed,' said BaseMetals.com analyst William Adams.

He added while 'there are risks to supply from strikes and maintenance shutdowns, in this environment, buyers may feel in no need to restock. Until they do, prices are likely to drift'.

Chile's Codelco, the world's largest copper producer, is currently negotiating a new labour contract with workers at its Norte division, as the old one expires on Dec 31.

Although the market is unsure as to the progress of those negotiations, it looks like another potential strike, at Xstrata PLC's Altonorte smelter, might be averted.

Xstrata is due to present its new contract offer to workers today, and Bhar of UBS noted that a company source has said the miner is confident its new offer will be accepted.

Elsewhere, lead edged up to 1,650.00 usd a tonne from 1,640.00 usd. The metal fell nearly 5 pct yesterday as funds sold after the 10 and 30-day moving averages were breached.

Zinc rose to 4,370.00 usd against 4,275.00 usd, after it lost nearly 2 pct yesterday even as the International Lead and Zinc Study Group said the metal was in a deficit of 320,000 tonnes for the January to October period.

In other metals, LME tin for three-month delivery fell to 10,925.00 usd a tonne from 10,950.00 usd yesterday, nickel climbed to 34,400.00 usd from 33,250.00 usd while aluminium bounced up to 2,857.50 usd from 2,800.00 usd.